Sri Lanka’s Private Sector: A Crucial Ally in the War on Corruption

October 02, Colombo (LNW): Sri Lanka’s private sector has been urged to play a pivotal role in combating corruption, particularly by holding directors accountable for their actions. 

This was the focal point of a recent session organized by the Policy Advocacy and Economic Contribution (PAEC) Committee of the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka).

 The session aimed to increase awareness about anti-corruption measures and engage the corporate world in the country’s efforts to ensure integrity in governance.

The forum highlighted the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) and its crucial role in promoting transparency and accountability in Sri Lanka. 

The recently passed Anti-Corruption Act, No. 9 of 2023, reinforces ethical standards in public service and extends its influence to the private sector. Director Accountability under Scrutiny

Dr. Harsha Cabral kicked off the session by addressing the complexities directors face, particularly in managing conflicts of interest. 

He emphasized that directors are privy to inside information, placing them in a position of immense responsibility. Under the Companies Act, all directors—whether executive, non-executive, or independent—are expected to prioritize ethical conduct in their decision-making.

The new Anti-Corruption Act introduces several provisions aimed at curbing corrupt practices in the private sector. For example, Section 106 criminalizes offering or receiving bribes to influence a director’s decisions, while Section 116 imposes penalties on those found guilty of violating the Act.

 Furthermore, Section 162 broadens the definition of “private sector entity,” making these rules applicable to a wide array of businesses, including those with state involvement. Directors are now required to adopt comprehensive anti-corruption and gift policies, ensuring greater transparency.

Emphasis on Compliance

CIABOC Commissioner Chethiya Goonesekera detailed the Act’s extended scope, particularly its emphasis on holding directors and employees accountable. Notably, directors can be held responsible for actions taken during their tenure, even after they have left the company. 

The Act also mandates full cooperation with investigations, imposing severe penalties for obstruction or providing false information. Furthermore, it extends its jurisdiction to include offenses committed outside Sri Lanka, ensuring a more robust approach to combating corruption.

Systemic Reforms and Ethical Business Practices

Chairman of the Ceylon Chamber of Commerce Suresh Shah called for significant reforms to create a fairer business environment. He proposed moving from discretionary approvals to rules-based systems, which would reduce opportunities for corruption. 

Additionally, he advocated for political reforms to separate political influence from administrative decisions, and for more transparency in political campaign financing. Such reforms, he argued, are essential for fostering an ethical corporate culture and reducing corruption.

Moving Towards a Zero-Tolerance Approach

The session also addressed the importance of corporate hospitality and whistleblowing. While transparent corporate hospitality is not considered bribery, it must comply with local laws. Whistleblowers, on the other hand, are encouraged to report misconduct, although they are not legally obliged to do so unless directly involved. CIABOC will investigate complaints, provided there is credible evidence.

The Road Ahead

The session concluded with a series of recommendations, including the establishment of anti-corruption policies across all sectors, especially small and medium enterprises (SMEs). Professionals in finance and accounting were encouraged to adopt a zero-tolerance stance on corruption and actively support enforcement measures. 

The panelists emphasized the need for a culture of integrity, underpinned by education and open communication within organizations. Finally, the idea of an independent inquiry board to oversee public sector tender processes was proposed to ensure fairness and transparency